In the wake of the terrorist attacks of Sept. 11, 2001, when many of his competitors were scaling back operations, Ted Scislowski took the opposite approach with Nationwide Hospitality Inc. Faced with an airline industry fraught with bankruptcies and financial uncertainty, NHI, a corporate travel service provider, instead aggressively sought new customers. “During the bankruptcies, I believe a lot of my competitors were cutting back their services trying to protect their companies financially,” Scislowski says. “Yeah, we were hurting, but rather than constrict, we wanted to expand and we went out and created more opportunities.”
Scislowski’s gamble paid off. The company has since grown at a 40 percent clip annually and now provides services in more than 20 cities. Smart Business spoke with the president and CEO of NHI about how staying ahead of the competition means being willing to think outside the box.
Q: How would you describe your leadership style?
When we hire people, I try to hire people that think on their own and that are experienced in the field we’re in. We do a lot in the airline business, so the talent we need to hire is one that can run itself.
They don’t need to be managed or hand-held, they can think outside the box and manage the problems we give them. The managers around me are very independent and free to do the things they need to do and run the tasks instead of being micromanaged.
In any business, if you’re standing still, your competition is going to be coming up with more creative ideas and better ways of doing things. Micromanaging to me is locking up the employees in one thought pattern, tying their hands and making it a lot harder for them to do their job. Giving them the freedom, they go outside the box and think of new ways to do things.
What we want to do is come up with creative solutions for our customers. Even though maybe one thing is working, come up with better ways to handle it. Continually come up with ideas. Giving my managers that kind of freedom makes them more productive.
Q: What do you look for in a new hire?
My interview process is probably one of the hardest to get through because not only do we look for experience experience in this industry is a necessity we want people that are not set in their ways. Hiring a person that has locked in one way of doing things really stymies the company.
During the interview process, I look for imagination, initiative. I want to see if, given this project, how they will run with it. Are they thinking outside the box? Are they looking for unique solutions, or are they giving me standard solutions in the industry?
Flexibility is the key to growth. It’s been the key to our growth. We’ve been able to jump leaps and bounds over our competition because we’re going to the same customers, but we’re coming up with more creative solutions.
Our employees are not only able to teach me, as well as my customers, new things, they’re also able to create new ways of handling things, and that’s what it’s all about. As technology changes and systems change and new problems arise, we want to be proactive and make sure we’re ahead of our competition in finding these solutions for our customers.
Q: What is the most important lesson you have learned?
Take nothing and take no customer for granted. The one reason I like to say, ‘If it ain’t broke, break it,’ is it’s too easy in today’s world for competitors to come up with new ideas, to come up and pay attention to a customer that you feel is yours and all of a sudden, one day, you lose it.
In every industry, people are changing. It is important that nothing is taken for granted. Make sure your customers are paid attention to, your employees are paid attention to, and realize that you just can’t stand still. You want to exceed your customers’ expectations, so you have to keep moving forward.
It’s not just being reactive but being proactive. It’s being able to come to a customer and say, ‘Look, we see a need that you’re going to face because we foresee a problem.’ By being proactive and communicating to that customer, suggesting some courses of action, it makes the customer feel secure that, ‘We’ve got a company that’s got our back. They’re watching out for us. They’re not just reacting to a problem that pops up, they’re foreseeing the problems and they’re generating new solutions to get ready for them.’
The best advice is to keep growing and keep changing. Whatever your product or service is, don’t ever be satisfied with what you’re doing. If you’re satisfied, someone is going to come up and outgrow you and take your customers.
HOW TO REACH: Nationwide Hospitality Inc., (847) 718-9181 or www.nationwidehospitality.net
When John Westerberg inherited the reins of the family company from his father in the 1960s, Nelson Westerberg Inc. had a solid reputation as a local Chicago moving company. But it didn’t take long for Westerberg to introduce a new philosophy, one aimed at expanding the company beyond small, neighborhood accounts.
“If you’re going to get on a national and a global plane, then you’ve got to have a whole different approach to life, and that has to be that you’re absolutely the best thing out there,” Westerberg says. “It’s all based on quality.”
Smart Business spoke with Westerberg, whose company posted $78 million in 2005 revenue, about how growing your business really can be as fundamental as being the best you possibly can.
Q: What is the key to building customer loyalty?
If your initial philosophy in being in business in the first place is to be better than your competition, then your initiative is going to be quality. There are three Qs in business: quality, quality and quality.
If you’ve got a service that’s directed toward that initiative all the time, if that’s the main focus that you have — to be a quality provider, a quality supplier, a quality company to your customers — then your customers are going to stay with you for a long time. I’ve never had a customer come to me and say, ‘You know, you’re the best thing since sliced bread, you are absolutely the best there is in the industry and we love you, but we can’t do business with you anymore.’ I’ve never had anybody tell me that.
If you can’t deliver the quality, then you’re not going to last very long in our company. I don’t care if you’re an owner/operator, an operations manager, a customer service representative or a warehouse man, if you don’t have at the forefront of your thinking every single day you come to work that you’re going to do the best you possibly can for our customers, you’re going to be in trouble in our company.
I’m driven by that myself. I’m not going to have anything with my name on the door that’s going to embarrass me.
Q: How do you set goals?
The Japanese have a very good philosophy about business. They don’t worry quarter to quarter or half to half or one year to another; they see a very long-range vision.
I see my company exactly that way. I don’t worry about how much profit we might make in a three-month period, I’m interested in how we are doing on a long-term basis. I want to look out there four, five, six years and see where we want this company to be and ask if we are still happy with our business model.
Every time I have a meeting with our top people, I ask them the same question: Is our business model still viable in today’s marketplace? That, to me, is one of the absolute most important things. Every company has a business model, and every company has a culture, but is it still viable in today’s marketplace?
Q: How would you describe your leadership style?
I’ve always believed in order to run a small business effectively, you’ve got to be involved in the processes and you’ve got to be involved in truly managing the company and making sure that the initiatives that you set out for your people are being carried through.
Otherwise, you’re going to lose your business really quick. There’s no guarantee in American business that you can make it from one year to the next if you let go of the process and you don’t manage it effectively and closely.
If you’re far removed from the street, where things are really happening for your people and for your company, if you step back too far, you might get a nice macro look at your company, but it won’t tell you what’s really happening on the ground. In our business, or in any business for that matter, you’ve got to know what’s happening on the ground.
That’s the difference. Don’t confuse it with being a micromanager. This is hands-on management, understanding what your people are doing but not necessarily trying to do their job for them.
Q: What is one thing that can limit a company’s growth?
Losing track of where you’re trying to go. If you don’t have a clear idea of where you want to go and what customers you want to serve and what company you want to be in, you can’t grow anything. You won’t know what to do or how to even get the thing started.
Success is defined by your customers and by your people. You’re successful if your customers love you, if they think you’re doing a great job for them and they don’t think there’s anyone else out there who could do as good a job as you’re doing for them.
Forget alarm systems. The most potentially dangerous intruders already know the codes. When employee dishonesty penetrates a company, the consequences can be incredibly damaging.
“Financial losses from employee dishonesty do happen,” says Ralph Cummings, fidelity underwriter at Westfield Insurance. “We see them every day. “The results can be devastating not only financially but also psychologically. The guilty employee often is a trusted, long-time member of the business. The hurt that comes from the breach of trust adds to the loss.”
Smart Business spoke with Cummings about the issue of employee dishonesty and how to prevent it.
How do dishonest employees steal from their companies?
Small-scale theft happens with the loss of relatively low-cost materials and supplies. Large-scale theft usually results from taking expensive property or accessing the company’s bank account.
At one truck dealership, an individual in the parts department took expensive truck parts with him over a long period of time. He would make excuses, such as he was taking the items for a delivery, when in fact he was taking them for his own profit. Another unfortunate loss happened with a contractor whose bookkeeper took money from the company over a period of seven years. The loss exceeded $1 million and cost the owner his business and his relationship with his sister, who was the bookkeeper.
The business community often isn’t aware of these dangers and situations because the affected companies don’t want to publicize the loss. But the truth is that employee theft does happen, particularly when employees are trying to support expensive bad habits, and businesses need to guard against it.
How does employee dishonesty affect businesses’ insurance expenses?
Insurance is a mechanism for spreading losses among policyholders. Protection against a large, uncertain loss (an embezzlement) is traded for a small, certain loss (the premium). As a company’s losses grow in size and amount, the premiums to pay for them will increase.
How can companies create a culture of honesty and integrity?
Every company should closely examine the way it deals with its customers and employees. Does the company deal fairly with others, or does it often take advantage of them? If employees are encouraged or permitted to deal dishonestly with customers, how can they be expected to deal with integrity with their employer? A culture of honesty and fair dealing must start with upper management. Treating employees fairly and respectfully is also very important. Showing an interest in each employee, and making each feel that his job is important can foster employee satisfaction. But beyond that, an employer must demonstrate that cheating, dishonesty and unfair business practices will not be tolerated.
What controls can help prevent employee dishonesty?
Over the years, I have seen many employee dishonesty losses. There is one method that seems to recur most often and seems to result in very large losses.
Every insured company has a bank account. At least one employee is responsible for reconciling the monthly bank statements against the employer’s records. That person is the most likely to detect any discrepancy between the two. Very large losses happen when this person is also permitted to handle bank deposits or to have access to blank checks.
For example, if an employee is given a deposit to take to the bank but decides to keep it for himself, the bank statement will show no deposits for that particular day. An impartial bookkeeper would catch this discrepancy in the records. However, if the person reconciling the bank statement is also the person who should have made the deposit, he will obviously not let management know about his theft. With no unusual records and no checks on the behavior, the employee is free to continue this activity indefinitely.
Likewise, if the person who reconciles the bank statements also has access to unissued checks, he could use the employer’s checks to pay his personal bills, make purchases, or simply make checks payable to himself. Even if this individual does not have check-signing authority, he could forge a signature. Banks generally just pay the checks and rely on the customer to let them know of any discrepancies. It is not uncommon for losses of this type to continue for years and reach very high amounts.
One of the biggest keys to preventing employee dishonesty is to have the bank accounts reconciled by someone who does not handle the bank deposits and who does not have access to unissued checks.
RALPH CUMMINGS is a fidelity underwriter. Reach him at (330) 887-0544 or firstname.lastname@example.org. In business for more than 157 years, Westfield Insurance provides commercial and personal insurance services to customers in 17 states. Represented by leading independent insurance agencies, the product we offer is peace of mind and our promise of protection is supported by a commitment to service excellence. For more information, visit www.westfieldinsurance.com.
Mark Rose has chalked up an almost dizzying array of accomplishments since becoming CEO of Grubb & Ellis Co. in March 2005.
The real estate company launched a new business and took it public, started a project management and a private capital investment group and sold 5 million shares of stock in a public offering. It beefed up its brokerage ranks by 10 percent and replaced the heads of four of its largest offices.
Add to that the development of a five-year strategic plan to revamp a company that had been rendered moribund by a previous management team that had fumbled while trying to transform it into a consulting business. That floundering had led to an exit by many of its valued personnel, the key asset in a business reliant on market savvy, seasoned professionals and sharp salesman-ship.
“They had a leader who was hired and came in and supposedly had all the answers on his way in the door, and that’s just never a way to build a successful company,” Rose says.
Rose has taken hold of the situation at Grubb & Ellis to revamp the company in a substantial way, but not in a manner that would cause the convulsions that can occur at public companies that fall into trouble and resort to quick fixes.
“It’s nine parts evolution, and there might be one part revolution,” Rose says.
That evolution started with Rose’s realization early on that the culture at Grubb & Ellis, which posted $490 million in revenue in fiscal 2006, was bruised but still retained a solid core of value that he could build on.
“Changing the culture was less important than not harming the culture and finding ways to augment and adjust and improve it,” Rose says. “The Grubb & Ellis Co. has been around for 48 years and has a great culture. It has a culture of collegiality. It has a culture of great client service. It has built a brand that many of the individuals that have been here a long time have fostered to make sure that the brand lives on and all of those positive attributes were there.
“But unfortunately, because of some missteps in the leadership positions and the management positions over time, there were things like the lack of some tool kits that might have been built to improve the clients’ services even further.”
Rose chose to revive the company not by transforming it into an image of his making, but by making the organization drive the change and by taking the best aspects of its culture and returning it to its historic corporate roots.
“What I wanted to do and what was a challenge to do was come in and reinforce the message that we want Grubb & Ellis’ culture to be Grubb & Ellis’ culture,” Rose says. “We wanted it to be credible that a CEO was not coming in with past experience working for a competitor for a long time and was going to turn it into that place. “But you do want to celebrate all the great parts of a culture, and you do want people to feel comfortable that you do understand it.”
Going into the field
Rose’s background includes a stint as as a CFO, but in the early months of his tenure, he spent more time immersing himself in the day-to-day activities of the business than he did looking at the company’s books. Before he got started, he wanted to get an authentic understanding and feel for both the business and the culture at Grubb & Ellis.
“First is assessment, and assessment of a culture is not sitting in your office,” he says. “It’s getting out there and meeting with people. This is a people business; it’s a high-performance professional sales organization. That’s what a real estate service organization is, so it’s about the people. I visited almost every office in the first year, and those visits were to assess and to listen.”
Rose didn’t limit his contacts to those within the company in that first year. He spent a lot of time with people outside the company who could give him a view of Grubb & Ellis that he couldn’t get inside, even if he ventured out of the executive suite. New to Grubb & Ellis, Rose tapped the expertise and experience of his predecessors to gain insights about the company.
“One of the first things that I did, I went out and sought out some of the prior CEOs of the company to hear what did they think of the company, what was the culture,” Rose says. “I went back to some of the leaders of the company 10, 15, 20 years to hear what this company was all about and what this place means to them that I could embrace and understand and build on that.”
And he quizzed the company’s customers and its competitors, two groups that he says are likely to give an unvarnished view of how you’re doing.
“I met with our clients to listen, and I actually met with our competitors to hear from them, and it’s a very interesting process because your competitors will tell you all the things that you’re doing wrong and they’re using against you in pitches, and they’re basically giving you the key to combatting them and how to be more successful,” Rose says. “I met with them and said, ‘Tell me, what are your views of Grubb & Ellis?’”
To gain a sense of how the company was conducting itself in the field, Rose even threw himself into the sales process, pitching some major pieces of business to clients.
Getting in the trenches was more than a tactical move. He says that by putting his hands on the organization to witness firsthand how it works, he sent a powerful message throughout the company.
“I will tell you that in the first six months or so, when several teams, both long-tenured and new folks, asked for help and I agreed to get on the plane to help them, I think it sent the right signal,” Rose says. “It’s a business where we can strategize until the cows come home, but you actually have to get out there and do it, and I think that was probably one of the earliest successes for this organization. The feedback I got was, ‘This guy was willing to get on a plane and come help us.’”
And while being involved in the nuts and bolts of the business can have its payoffs and rewards, Rose warns that it can have a downside if it’s taken too far.
“The one thing that you don’t want to do is get into micromanaging or build an organization where you’re hindering empowerment and just spending time focusing on accountability,” he says. “If your leadership is spending too much time sticking their hands into the empowerment side, you take the empowerment and accountability out of balance.”
Rose says that driving change can be a difficult process, and that there nearly always will be some resistance.
“Any time you need to make change, there will be those who are either protecting what they built, protecting their jobs, or protecting that they may not have an answer or that what is comfortable is the best, when in most cases, the success of most organizations comes when you push people out of their comfort zones.”
And while some will try to hinder change or won’t be able to meet its challenges, the key to overcoming resistance is not to force the change from the top but to give the organization the responsibility and empowerment to drive it.
“Different CEOs have their own version of unlocking the code, or the secret sauce,” Rose says. “But when you believe in getting your teams together and making them part of the solution and part of the changes and don’t come into the office and say, ‘Here, do this’ or ‘You’re going to do this’ or ‘This is a best practice,’ that’s very powerful.”
Instead, Rose puts much of the responsibility for coming up with strategy and determining the changes the company needs in the hands of his employees. Working on walls of white boards, Rose and his team base every change on a hypothesis that has been fleshed out based on factors such as what they’ve observed about the company, the marketplace, the latest technology and the competition.
In one case, the company came to the conclusion that it needed to reorganize how it delivered its four principal lines of business to clients. With its old structure, services were in two business silos and not readily offered or available to clients of one unit or the other.
The process of developing a hypothesis and working through it led the company to revamp the fundamental structure of its service delivery. Now, says Rose, Grubb & Ellis can serve fewer clients and derive more profit by offering a wider array of services that are available to all of them.
That kind of fundamental change comes when a company can tap its brainpower and bring ideas and change up through the organization.
“Building an organization that will think out loud and think for themselves and will have views, whether you implement them fully or at all, that process has been more sophisticated and very successful in helping us make the sheer number of changes we’ve made,” Rose says. “True, as a management team, you’re guiding somewhat, but what you’re guiding is a framework to get you to a place. But the content really needs to come from the gray matter, the brainpower of your organization and the team that you’re building. It’s been very successful in the early stages to include a diversity of opinion and the knowledge of many individuals to not only craft something that is good but something that is very, very sustainable.
“A few simple strategies and tactics to change a company instill empowerment and accountability, connect with everybody to understand why you’re doing it. We may know that we need to get to Z but the CEO can’t tell you how to go from A to Z. There needs to be a collaborative effort to get there.”
The company’s five-year strategic plan is still in its early stages, not at A but still a way to go to Z. However, Rose expresses optimism for a plan that was put together with input from a wide variety of people, both within and outside Grubb & Ellis. Critical to putting together such a plan is the willingness to listen to as many of those sources as possible.
Says Rose: “I don’t care whether it’s the company or it’s at home with your family ... you have to listen. So many great ideas come from folks other than yourself, and if you’re confident enough to embrace them, hopefully good things will happen. There are a lot of smart people out there.”
HOW TO REACH: Grubb & Ellis Co., www.grubb-ellis.com
While 55 percent of hiring managers say it was difficult finding qualified candidates a year ago, 81 percent say that it was just as difficult, or more so, today, according to this year’s Employment Dynamics and Growth Expectations (EDGE) Report. But while the balance of power has shifted to favor highly skilled workers, the majority of employees surveyed said they are still feeling cautious about the job market and not very willing to negotiate higher salaries.
The survey and report were developed by Robert Half International (RHI), the world’s largest specialized staffing firm, and CareerBuilder.com, the United States’ largest online job site. The survey, which included responses from more than 1,000 hiring managers and 3,000 workers, was conducted to determine which group has more clout in the current job market.
“There is an increasing talent shortage that hiring managers are keenly aware of, but that reality is not on the radar screen of job seekers,” says Steve Kass, president of the Great Plains District of Robert Half International in Chicago.
Smart Business spoke with Kass about this curious discrepancy, and what it means for both workers and employers.
Could you explain the reason for the talent shortage?
With unemployment rates at around 5 percent, the country is basically at full employment and there’s a more shallow talent pool to draw from. The talent shortage is particularly acute in the fields of accounting, finance and information technology.
There is an increased need for accounting, auditing and finance professionals because of the stricter corporate governance created by the Sarbanes-Oxley Act. These regulations have created accounting jobs that did not exist just five years ago, and has led to a demand by employers to find highly skilled employees to fill staff-level positions. In the information technology sector, companies are increasingly faced with a large number of baby boomers retiring and smaller generations of replacement workers entering the work force.
If jobs are plentiful, why are workers being cautious when taking a new job? And why are they hesitant to ask for more money?
Although the job market is currently in the employees’ favor, our report indicates that 74 percent of those surveyed are not looking for a new job. One reason is because the layoffs and workplace uncertainty from a few years ago are still fresh in people’s minds, and many employees are hesitant to test the job market when they have the security of a job. Another reason may be the perception of the economy.
If you look at the facts, you can see that the job market and the economy is strong. But if you turn on the news, there’s a lot of negativity and bad news. So, as a result, people make that leap and assume that the economy is bad. But it’s not. It fact, the economy is actually doing tremendously well.
What should workers do in this environment?
The survey showed that employees are hesitant to push for more money even when employers are open to paying more money. While 45 percent of the workers surveyed said their compensation had increased in the last year, only a small percentage are willing to ask for more money in the future. Job seekers with in-demand skills have much more leverage than they think they do, and they need to try and use that leverage to increase their compensation and benefits packages.
What does this all mean for companies that are hiring?
It means that the market is more competitive than it has been in the past. Businesses need to be more open to paying more money, particularly when they find the right candidate. They also need to focus on retention strategies. Employers are becoming worried about turnover, and it is important to step up retention efforts, especially since 21 percent of hiring managers in the survey reported that turnover was higher than last year at this time.
What are actions surveyed companies taking to increase staff retention rates?
Thirty percent of hiring managers reported their firms have put in place new policies and programs to increase staff retention rates in the last 12 months, up from 23 percent this time last year. The primary measures taken included offering pay raises, bonuses, better benefits and more flexible schedules. This is a wise step considering the competitive hiring environment at the moment. The key is for employers to make sure their employees feel valued.
STEVE KASS is the president of the Great Plains District of Robert Half International in Chicago. Reach Kass at (312) 616-8200 or email@example.com.
The size of the companies acquired was less problematic than the enmity between the management teams of the two competing companies that had festered over the years. For Schawk, president and CEO of the brand image solutions company, it was like putting lions and tigers in the same cage.
“What was particularly challenging was the fact that we acquired the two largest prepress companies in Europe,” says Schawk. “The scale of the acquisitions was a minor factor compared to the competitive cultures that had developed at these companies throughout the years. There was a deeply entrenched history between the two. To say that they were bitter rivals is not an overstatement.”
The bad blood made for bad business, and critical matters such as closing facilities that duplicated services dragged along with little progress.
“This made integrating the management at both companies a painful exercise,” says Schawk. “In the end, it just wasn’t possible because neither management team respected the other. My decision to allow the management teams the opportunity to try to work it out themselves was a mistake, given the bitter rivalry. If I had to do it all over again, I would have made a change at the top much sooner.
“While we strongly prefer to leave management in place when we acquire a new company to leverage all the positive results of what they’ve achieved, in this case, the negatives tipped the balance.”
After changing most of the senior management, including the top manager, Schawk says, the European operations are finally on the right track. It’s been accomplished by following a simple formula.
“We went back to the basics and what has worked for Schawk for 50-plus years: Make managing directors P&L responsible, create a team-building/working environment, set clear, measurable goals and reward exceptional performance,” Schawk says. “This brought immediate clarity, direction, accountability and motivation to the operation.”
Schawk’s experience with a knotty integration after acquiring the European firms highlights how difficult transactions can be, even for a company and a CEO with a lot of experience at it. The company has made more than 50 acquisitions since Schawk’s father, Clarence, now chairman, started the company in an aunt’s basement more than half a century ago.
Fortunately for Schawk, most of the acquisitions he’s made, including the company’s first international buy in 1996, have gone a lot smoother than the European episode.
A good thing, too, because Schawk has decided that the company’s strategy has to be a global one, that to sustain growth and service its clients, most of them multinational consumer products companies, it has to be close to those customers.
And Schawk Inc. has had a lot of practice at acquiring companies.
Evaluating the target
Schawk makes integrations go smoothly by carefully selecting acquisition targets, making sure that there is a neat cultural fit and evidence of strong future financial performance and, unlike with the case of the big European deals, he does everything he can to keep the management structure already in place essentially intact.
“How we’ve become successful was not moving a bunch of ex-pats around the globe and managing businesses,” says Schawk. “We basically move one ex-pat, have him be in charge and secure local managers to run the business for us.”
Making a good acquisition that fits your company means picking the right target, taking your time evaluating it and being realistic about its performance.
“We do a lot of evaluation, but the primary driver is, to be honest, the account base, what kinds of clients they have, do they have the same mix of clients that we can add to our portfolio,” Schawk says. “Once we’ve determined that they are, we start to do an evaluation of their culture and how and if they could fit in. The next step is obviously negotiations. We closed on a new company in Cincinnati, a design house. That took us six to eight months to come to an understanding of where we’re going.”
And knowing when to back away from a deal is just as important a skill as knowing when to pursue with a full head of steam. Schawk has walked away from several potential deals for a variety of reasons, but nearly always because of factors uncovered in the due diligence process something he isn’t about to hurry just so the deal can close.
“In some cases, the valuation got to where we believed it was too high,” says Schawk. “In others, our due diligence revealed that false data was being supplied, and in one case, we learned that the target’s largest client was planning on moving its business to a competitor. While we are exceptionally disciplined about evaluating potential acquisition targets to ensure that they meet all our acquisition criteria financial, strategic, cultural, and operational it takes a keen focus and persistence over many months to complete the due diligence process.
“It’s as much about energy as it is knowledge and experience.”
Close attention to the due diligence process means some deals never see the light of day because they don’t pass muster.
“Certainly, some of the best deals we ever made are deals we haven’t made,” Schawk says. “We do a lot of historical analysis. We are very stringent on high integrity, clean books, good management, valuation. Typical buyers look into the future, ‘Their revenues are going to increase 20 percent next year.’ We do a lot of historical analysis.”
Judging the success of an acquisition comes down simply to the numbers.
“Financial is really the only way,” says Schawk. “They’re a success when they fit in with us culturally and make us money and get our investment returned as quickly as possible.”
Schawk says ensuring a cultural fit is often simply a matter of getting familiar with the target company’s owner, who sets the tone for the company and whose attitudes and values usually trickle down into the rest of the organization.
“It’s spending time with the owners. Typically, the owner’s personality and business acumen are transmitted into the business. Those generally spread down and usually, the way he acts is the way the rest of the company acts.”
Leverage internal talent
Schawk says keeping the transition smooth means constant communication with the employees of the acquired company, leveraging their skills and keeping them involved directly in the integration process.
“Look for exceptional talent inside the acquired company and assign them a role in the integration process,” says Schawk. “Keep all employees informed as much as possible about changes being considered and made, and also about progress toward shared goals. It’s not possible to overcommunicate in these situations.
“It’s also important to make yourself as visible as possible during this time and available 24/7 to handle any critical issues that may come up.”
Keeping the right team in place at the acquired company is key to keeping the business running smoothly and retaining its clients.
“The biggest thing is keeping the same management team and keeping the same employees in place,” says Schawk. “We don’t go into deals thinking that we’ve got people waiting on the sidelines, ready to go in and manage the business.”
While Schawk tries to keep management teams intact, it’s not always possible keep companies or their personnel together. Some acquisitions, such as its purchase of Seven Worldwide Inc. in New York City, have required trimming operations to ensure profitability. Schawk had to consolidate some of the New York operations, moving the prepress operations into a single facility and eliminating some jobs.
The workers’ union took legal action against Schawk, but later dropped it when the company offered a settlement package for the separated workers. A potentially ugly situation was smoothed over by Schawk, which subsequently received a letter from the union praising the company for its fairness in the way it had handled the situation.
Schawk says the best outcomes in such situations arise from keeping employees apprised of what’s going on and keeping the lines of communication open.
“Especially with plant closures, if there’s consolidation going on, we certainly inform them personally, if not by me, then by the other senior leaders,” says Schawk. “We have a quarterly newsletter that gives them information about what the company’s doing, which direction we’re headed. We do it primarily through communications and make sure everyone knows what’s going on, whether it’s good news or bad news.
“I personally visited every office in Europe when we went through those changes. I met with all the employees, I gave them our game plan, I told them what we’re doing, how we’re going to do it and how we’re going to get there. Again, people want to know what’s going on, whether it’s bad news or good news, and that’s probably what we do best.”
For CEOs who are considering striking out on the acquisition trail, Schawk advises they have a carefully thought out strategy, exercising discipline and careful evaluation of target companies.
“My advice would be, have a game plan and stick to it, have measurement tools to measure your progress as far as the direction you’re heading and how you’re going to get there,” says Schawk.
Schawk uses a variety of tools, including EBITDA earnings before interest, taxes, depreciation and amortization and pretax profits to judge an acquisition target’s performance, but insists that it’s accretive to earnings the first year.
“Make sure you have the discipline of sticking to especially if you’re making acquisitions value,” Schawk says. “Don’t get caught up in the hype. Be realistic about it, and stick to your guns on the value metrics that you come up with, and those are different in every industry and every part of the world. And again, surround yourself with a great team. I couldn’t do this without my executive team working hard every day.”
And the bottom line in making successful acquisitions is, well, the bottom line.
“Never take your eye off the bottom line,” says Schawk. “Always maintain a strict focus on fiscal responsibility. It may not be glamorous, but earnings, cash flow and the proper leverage are critical to achieving success driving your growth plan forward.”
How to reach: Schawk Inc., www.schawk.com
Along with e-mail’s benefits, however, come increasing risks and responsibilities all focused on the actions of employees who create, send, forward or save electronic communications. For this reason, business concerns should establish a strict set of standards for all employees. Failure to adhere to those legal policies places both the company and the individual at risk for legal or financial liabilities not to mention potential public embarrassment.
“This area of law is in its infancy,” says Dan Albers, a partner in the Intellectual Property and Litigation departments at Barnes & Thornburg LLP. “The law is evolving because there’s not a lot of precedence.”
Smart Business asked Dan Albers about privileged correspondence and the admissibility of e-mails in court.
Legally, what is the purpose of labeling e-mails like ‘Attorney-Client Privileged,’ ‘Not Public Data’ and ‘Trade Secret’?
If you label an e-mail, it at least allows you to show the court your intent at the time, so you’ll have more of an argument. It’s also easier to find those e-mails and try to protect them when they’ve been labeled for purposes of litigation.
It’s very important that ‘Attorney-Client Privileged’ communications be labeled and be maintained in a privileged way meaning that people not responsible for legal decision-making do not receive those e-mails.
‘Not Public Data’ or ‘Trade Secret’ e-mails contain proprietary information. Most courts have said that, in order for something to be treated as proprietary (a trade secret) the company must have taken reasonable measures to protect it from public dissemination. One of the ways you do that is to have instructions that certain kinds of information will always be labeled, and the dissemination list would always be limited to those people who would be involved in using that information for a business purpose.
The absence of both these labels can also have the opposite effect. Opposing counsel might ask how the originator expected an e-mail to be treated in a confidential manner if it wasn’t properly labeled.
What is the value of maintaining e-files in their original form?
If you’re going to use them in any substantive way in litigation, you need to maintain them in their original form to get them into evidence. Just like any other document, you need to show the original or a copy that has not been changed in order to have a basic foundation for getting it into evidence. If you cannot make that showing, there may be an inference drawn against you that you’re liable.
What can corporations do to help prevent being taken to court for abuse or misuse of electronic-based communications?
The most important thing is to have a corporate policy in place and have it incorporated into your employee manual.
The company should have access to all e-mail and electronic communications for company purposes at any time.
Whenever the company believes that it is likely to be involved in litigation, there must be some form of memorandum to the appropriate people to maintain electronic files.
The most important thing is to not destroy what would or could be relevant electronic discovery. If it’s destroyed, any favorable information will be unavailable. And you would much rather be able to respond to the substance of an e-mail, because it’s almost impossible to disprove any inference that an e-mail was destroyed for no reason.
Finally, employees should not publish in e-mails their conclusions about relationships with other companies, or potential litigation such as patent infringement, copyright infringement or legal liability. Crafty lawyers will get those e-mails into evidence, and their effects will be almost impossible to overcome.
Is copyright protection an important legal issue when it comes to electronic communications?
It depends on what material is being used and what it’s being used for. If you want to cite particular portions of copyrighted material that you think are relevant with the source that’s probably fair use and not a copyright violation.
But when a person takes copyrighted material for example an article or product brochure and sends it out across an entire business for the uses of carrying on the business, that could be a violation. Because it’s not being transmitted publicly, though, the question is, how is the copyright owner going to know it happened?
Copyright protection should be on the alert list for people who are responsible for use of internal Web sites, and they should discourage full use of copyrighted materials.
DAN ALBERS is a partner in the Intellectual Property and Litigation departments at Barnes & Thornburg LLP. Reach him at (312) 214-8311 or firstname.lastname@example.org.
Get the big picture, but don’t get in the way.
You have to not only fly at 40,000 feet, it’s important to be able to swoop down from time to time and look at the veins on the leaves on the trees. Good leaders are able to have that 40,000-foot view, but they are also able to get down and look at the veins on the leaves on the trees but they are smart enough not to get stuck there.
That’s what I try to do. Sometimes we’re successful, but not always. You guide the company at a strategic level, giving people responsibility and making them accountable but not necessarily getting in the way.
You want to be able to look out over the hood and down the road, but you also want to see what’s right in front of you. It’s a balancing act; one of the ways you do it is having strong analytical tools in the organization.
Listen to your hunches, but also get the facts.
You have instincts and assumptions in business, and you go out and try to validate it with facts or try to prove those assumptions wrong.
You get a hunch, you go out and gather the facts, and based on that, you make your decision. Gathering the facts could be talking to your leadership team, it could be talking to a customer, or it could be research. We try to make fact-based decisions here that are outgrowths of our assumptions.
And you don’t always have all the facts. Sometimes you have to go to some degree with what your gut told you, but you try to get as much information as you can, depending on the speed you have to make the decision with.
We have a highly interactive decision-making process. At the end of the day, more often than not, there’s consensus. Probably more often than not, your gut’s going to be telling you the right thing, but you have to go out and validate it. You’ve got to ask questions, and you’ve got to get answers.
You’re going to make mistakes, but you want to correct those mistakes very quickly. Minimize your mistakes, maximize your successes, but move quickly in all cases.
Give your employees potential for growth.
We try to not only make it an exciting place to work but an opportunistic place to work, where people see future opportunity and associates feel there is enhanced opportunity for them down the road. It could be through promotions; it could be through challenging new projects.
Those coupled with a positive, uplifting culture are the most important things. Our people here are used to a high degree of stress, as a result of the pace of growth we’ve had.
We try to keep it busy, not stressful. Our associates are used to performing under pressure, because of the flexible, adaptable changing environment.
We’re in a constant state of change here, and people grow to be comfortable with that.
Set your goals, and communicate them.
Focus; don’t spread yourself out too far. Don’t try to have too many priorities. Listen, but be decisive.
Be inclusive from a knowledge-gathering standpoint. Align the organization with your priorities, and make sure everyone knows what the focus and the priorities are.
Sustaining the rate of growth is a challenge. You want to ensure that you are highly responsive to your customers, but you’ve got the cultural integration of multiple sites and new employees coming on, and all the challenges that go along with that.
We don’t necessarily change the culture; it’s more like merging the cultures over time. Culture is really about behavior and setting the expectations, and over time, people need to meet those expectations. Over time, we try to align our organizations’ behaviors.
We do that by establishing a clear mission, by organization and understanding what the vision of the company is. You’ve got to set goals and communicate expectations to individuals, and show them how they fit into the overall objectives of the organization.
Set the example for your employees.
Honesty and ethics and values play a major role. You try to have activities that are extracurricular that the organization can participate in. You want to be fair, but generous at same time.
You are setting an example every day. We try to set an example in community, whether that’s a local community or national. Our associates are very committed to both, and that’s a result of us being committed to both. Whether it’s sending a care package to troops in Iraq, or cleaning up litter in downtown Rockford, our associates have come through for us.
We’re a learning organization, which comes along with being adaptable and flexible. We’re not afraid to ask questions, not afraid to go out and learn new things. We don’t assume that we already know. That’s what comes first: A yearning for knowledge, trying to sort it out.
We are certainly driven to succeed. We want to be successful at what we do, and we want to serve our customers well and win new opportunities and perform well at those opportunities.
You have to do it as a unit, like a football team. It’s not any one individual that makes it happen, it’s the unit. That’s really what it’s been. It’s been a unit of associates executing for our customers, trying to bring efficiency and value to the process.
HOW TO REACH: SupplyCore Inc., (815) 964-7940 or www.supplycore.com
For example, private bankers can save their clients time by customizing personal or business loan structures, reducing turnaround times for products such as construction or bridge loans, and making it easier to meet crucial fiduciary deadlines. In effect, they become extensions of their clients’ businesses and families and their chief financial advisers as well.
Smart Business spoke with R. Scott Wolfsen of MB Financial Bank N.A to get some insight into the benefits of private banking and the reasons owners should consider it.
What is private banking?
It is a comprehensive, advisory approach to personal financial management that gives clients a single point of contact for all of their personal financial needs.
Private bankers work closely with their clients to provide customized credit and cash management services that typically include checking and money market accounts, certificates of deposit, lines of credit, and first and second home mortgages. They also act as the liaison between clients and the other specialized wealth management services within the bank such as investment management and personal trust.
Why do business owners establish relationships with private bankers?
While the initial contact between banker and client may be driven by a specific loan or deposit need, business owners quickly see the advantage of having an established, trusted adviser to mitigate the difficulties associated with the complex financial environment in which they operate today. From buying that vacation home to saving for retirement, private bankers will bring together a team of competent, experienced professionals all working toward the client’s long-term goals.
Can’t business owners get the same type of service from their commercial bankers?
The private banking relationship is a supplement to not a replacement for the commercial banking relationship. While the typical business owner’s personal finances are often closely tied to his or her business, the personal needs and solutions are unique. The private banker works closely with the commercial banker to ensure that all the client’s financial needs are met as conveniently and completely as possible.
How does private banking benefit business owners?
The private banker provides a single source for a vast array of wealth management services and finds solutions based on a comprehensive understanding of the business owner’s ultimate goals and objectives. Having an established, trusted relationship often means shorter response times, faster solutions and greater flexibility in meeting the client’s needs. Most institutions also have customized products for the private banking customer with preferred rates, structure, or fees based on the total relationship.
What criteria would a business owner use when selecting the private banking institution best suited to his or her needs?
While similar, each institution will approach the private banking business in its own unique way. The important thing is to find an organization where you are comfortable with the culture as well as the people. For business owners, this often means banking where the company banks. Using a single institution for both business and private banking services ensures that all of their financial advisers are working toward a common goal with the most comprehensive information available.
Are there minimum requirements clients must meet before seeking private banking services?
The qualifications for private banking will differ from institution to institution but will generally include parameters for income, net worth, investable assets, and/or loan amounts. Most banks look for clients with personal income over $250,000, assets available for investment of $500,000, or personal lending needs over $1 million. That said, commercial banking customers not meeting these standards individually will often qualify based on the commercial relationship with the bank.
Business owners interested in establishing a private banking relationship should speak with their commercial banker to see what services are available.
Is there anything intangible that contributes to a strong, long-term private banker-client relationship?
The most significant intangible factor that guides the relationship is communication. Private bankers recognized that each business owner is unique with respect to their goals and objectives, their resources, and their time frame. Private bankers learn as much as they can about their clients, from special family needs to business succession plans. By working together on an ongoing basis and communicating regularly, the banker can ensure that the business owner’s financial needs are met both today and in the future.
R. SCOTT WOLFSEN is first vice president with the Private Banking Division of MB Financial Bank N.A. Reach him at (847) 653-2154 or email@example.com.
Bachelor’s degree, chemical engineering, University of Michigan; MBA, University of Chicago
First job: Lot boy at a car dealership
Whom do you admire most in business and why?
My father. He spent 30 years at GE in human resources and he always provided great counsel to me. He told me to get a technical undergraduate degree, work for a few years, then go back to business school and get an MBA.
What is the most important business lesson you’ve learned?
You can never have enough good people.
What has been your toughest business challenge?
Changing perception of the public sector to accept for-profit educators as quality providers.
Describe your leadership style.
I think I’m very approachable. I occupy the corner office, but I’ve never thought of myself as any better than anyone else. I tend to hire people who take the results seriously but don’t take themselves seriously. I’ve always believed that you can have fun and make money.